U.S. Awards Contracts to Replenish Strategic Petroleum Reserve with 3.3 Million Barrels at $79.38 Each
The U.S. awarded contracts to purchase 3.3 million barrels of oil to help replenish the Strategic Petroleum Reserve (SPR) after a significant sale from the stockpile in 2022, the Department of Energy announced on Friday. The oil is being bought at an average price of $79.38 per barrel. In 2022, President Joe Biden’s administration sold 180 million barrels of SPR oil to control gasoline prices that surged following Russia’s full-scale invasion of Ukraine.
The United States established the SPR in 1975 after the Arab oil embargo caused gasoline prices to spike and harmed the U.S. economy. Presidents have utilized the SPR, the world’s largest oil reserve, to stabilize petroleum markets during times of war or when hurricanes disrupt energy infrastructure along the U.S. Gulf of Mexico.
The Department of Energy also stated it is looking to purchase an additional 3 million barrels for delivery in November. So far, the agency has bought back only 35.6 million barrels of the 180 million barrels sold.
The Biden administration aims to buy back SPR oil at about $79.99 per barrel. However, buying oil at that price could be challenging with the approach of the peak U.S. summer driving season, which traditionally increases oil demand.
West Texas Intermediate oil prices settled above $80 per barrel on Friday as economic indicators from China and the United States, the world’s top two oil consumers, raised hopes for higher demand.
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